Transcript Document
Implementation of Internet
Marketing Strategy
Stage Five: Designing the
Marketing Program
Entails designing a particular combination of
marketing actions (termed levers) to move
target customers from awareness to
commitment.
Framework used is the Marketspace Matrix.
Stage Five: Designing the
Marketing Program
To understand the Marketspace Matrix, the four stages
of the customer relationship and the six associated
classes of levers that can be employed must be
defined first.
Four Stages of Customer Relationship:
1.
2.
3.
4.
Awareness
Exploration
Commitment
Dissolution
Stage Five: Designing the
Marketing Program
Six Classes of Variables in the Internet Marketing
Mix:
1.
2.
3.
4.
5.
6.
Product
Pricing
Communication
Community
Distribution
Branding
Stage Five: Designing the
Marketing Program
Two more important concepts, Individualization
(customization) and Interactivity, need to be
explored to fully understand the profound
implications the Internet brings to business.
1. Individualization
The Internet enables the firm to engage in customerspecific actions – a broadcast to an audience of one.
Equally important, the customer can control the degree of
customization by taking action to set the level of
customization desired.
Stage Five: Designing the
Marketing Program
2.
Interactivity
Defined as the extent to which a two-way
communication flow occurs between the firm and
customers.
The Internet enables a level of customer
dialogue that has not previously been
experienced in the history of business.
Products and services can be designed in real
time by the customer, maximizing both
interactivity and customization.
Stage Five: Designing the
Marketing Program
The Marketspace Matrix
The Marketspace Matrix is a framework
illustrating the levers that the Internet
marketer may choose to use at each stage of
the customer relationship.
The Internet’s 2is
The 2is allow firms to choose levers that can
move customers through the relationship
phases faster and more effectively than ever
possible.
The 2is affect each category of levers
differently, but the end results remain
consistent across all levers.
Product, Pricing, Communications,
Community and Distribution.
The Marketplace Matrix
Relationship Stages
Awareness Exploration Commitment Dissolution
Product
Categories Price
of Levers Communication
Distribution
Community
Two Integral Components of
Implementation
Objectives
Deliver the promised
customer experience
Turn
strategic intent /
concepts into results
Build the
infrastructure to
deliver on the brand
promise
Innovate / Renew
the customer
experience
Source: Monitor Analysis
Objectives
Maintain fit between
Marketspace evolution
and the company’s
delivery system and
product offering
Why Does Implementation Matter?
Strategy
Good
Appropriate
Inappropriate
Success
Roulette
All that can be done to
assure success has been
done
Implementation
Trouble
Poor
Poor execution hampers
good strategy Management may never
become aware of
strategic soundness
because of execution
inadequacies
Good execution can
mitigate poor strategy,
forcing management to
success
or
Same good execution can
hasten failure
Failure
Difficult to diagnose - bad
strategy masked by poor
execution
More difficult to fix - two
things are wrong
Source: Modified version of materials in The Marketing Edge by Thomas V. Bonoma. 1985. New York: The Free Press.
Guidelines for the
Marketspace Matrix
No single best strategy
Best strategies provide superior customer
support
Levers should emphasize the functional,
symbolic and experiential aspects of
consumption experience.
Principles for Marketspace
Matrix Design
Which lever should be used?
Choose Levers to Effect a Change
Determine Which Levers Have the Most Leverage
Consider Barriers to Advancement
Consider the Medium’s Effect on Desired Behavior
Level of Involvement Matters
Understand Consumer Learning Trends
Credibility of the Channel Matters
The Choice of Levers Must be Consistent with Positioning
Choice
The Medium can be the Message – or the Product
Matrix Design Must be Adaptive
How should Marketing Resources be
Allocated on a lever-by-Lever Basis?
How should Marketing Resources be Allocated on a
lever-by-Lever Basis?
How do the Levers Interact?
Consider Correlation of Effect
Beware of Segment Alienation
Selected Levers Must be Integrated
How should the Levers be Sequenced?
There is no one silver bullet
Sequencing of Levers matters.
Basic Product
Development Levers
Basic Product
Packaging
Attributes and Features
Customer-Specified Attributes and Features
Mass-Customized Product
Augmented Product
Development Levers
Customer Service Programs
Postsales support, customer care, & customer
relationship management.
Loyalty Programs and Privileges
Availability of Complementary Products
Upgrades
Enabling Community
Additional Functionality
Fulfillment Capabilities
How Products Enable
Customer Relationships
Two primary techniques:
1.
2.
Deploying the product development levers that
are appropriate for the existing relationship and
Emphasizing the elements of the value
proposition that are most relevant at a given
stage of the relationship.
How Product Enable
Customer Relationships
Relationship Stage
Lever(s)
AWARENESS
Packaging
EXPLORATION/
EXPANSION
Packaging
COMMITMENT
Availability
Features
Fulfillment Capabilities
Customer Experience
products
Customer-specified attributes
and features
Mass Customization
Advanced Internet Functionality
Upgrades
Loyalty
Product Attributes
&
Customer-specified
attributes and features
Mass Customization
Postsales Support
DISSOLUTION
of complementary
Customer
Care
Programs
Customer Experience
Enabling Community
Customer Relationship
Management
Basic Pricing Strategies
Cost Plus
Target Profit Growth
Target-Return Pricing
Prestige Pricing
Price as a Sign of Quality
Cyclical Promotional Pricing (Hi-Lo)
Everyday Low Pricing
Fairness in Pricing
Promotional Low-Cost Pricing
Dynamic Pricing Strategies
Dynamic Pricing is one of the most significant
contributions the Internet and the 2Is have
made to pricing strategy.
The Internet has enhanced dynamic pricing in
two ways:
Decreased Menu Costs
Interactivity
Auction Types
English Auctions
Reverse-Price English Auction
Dutch Auctions
First Price Sealed-Bid Auctions
Reverse First Price Sealed-Bid Auctions
Group Buying
Exchanges
Implementation Across the
Four Relationship Stages
Relationship Stage
Pricing Levers
AWARENESS
Promotions
Price
Bundling
Frenzy
Pricing
Prestige Pricing
EXPLORATION/ EXPANSION
as a Sign of Quality
Hi-Lo Pricing
Dynamic Pricing
Everyday Low Pricing
Promotions
Justify
Prices
Loyalty Programs
COMMITMENT
DISSOLUTION
Promotions
Affiliates
Tiered
Loyalty Programs
Wide Variety of Pricing
Programs
Profit-Enhancing
Discontinue
Adversely Affect
Pricing
Promotions
Reconfigure Loyalty
Programs
Opportunities
Programs
Profit
How the Internet Affects
Communications
Competition and Expectations
Transformation of Communication
The 2Is
Interactive
Individual
Importance of Integrated
Communication
Goal of marketing and communication is to
convey relevant messages to the right
consumers at the right time.
Synergy between messages is integrated
communications.
Traditional and interactive marketing methods
are converging.
Communication Types –
Marketing Levers
1.
2.
3.
4.
Marketing communications, which includes
all the points of contact that a firm has with
its customers, can be grouped into four
categories:
Mass offline
Personal offline
Mass online
Personal online
Communication Types –
The Marketing Levers
Mass-Offline Marketing Levers:
Broadcast Media: television, radio, outdoor & public
relations
Print Media: newspapers, magazines, yellow pages,
brochures, newsletters
Point-of-Purchase Displays
Communication Types –
The Marketing Levers
Personal Offline Marketing Levers:
Telemarketing
Direct Mail
Statement Stuffers
Customer Service
Communication Types –
The Marketing Levers
Mass Online:
Basic Online Tools: banners, interstitials, search
engines, point-of-purchase displays
Applications of Basic Online Tools: partnerships and
affiliate programs, sponsorships, chat rooms, serial
marketing
Communication Types –
The Marketing Levers
Personal Online:
Personalized Commercial Websites
E-mail Marketing: viral marketing, loyalty programs,
customer service
Communication Process
1.
2.
3.
4.
5.
6.
Identifying the Target Audience
Determining the Communication Objective
Developing the Media Plan
Creating the Message
Executing the Campaign
Evaluating the Effectiveness of the
Campaign
Implementation Across the
Four Relationship Stages
Relationship
Stage
Marketing Levers
AWARENESS
Online
EXPLORATION/
EXPANSION
Online
COMMITMENT
Online
DISSOLUTION
Personalized
levers: online billboards, search engines, e-mail, viral marketing
Offline levers: television, magazines, radio, yellow pages, billboards/
outdoor
levers: online billboards, search engines, e-mail, viral marketing,
website, permission marketing, serial marketing
Offline levers: television, radio, newspapers, packaging
levers: targeted email/ permission marketing, personalized pages
Online/ Offline levers: loyalty programs, customer service
Offline levers: telemarketing, direct mail permission marketing with
personalized offers
Termination
pages
Is the Internet a
Distribution Channel?
A distribution channel is the system of
organizations involved in the process of
making a product or service available for
consumption or use.
Marketing channels therefore facilitate the
exchange of goods and services between
buyers and sellers.
How have the 2Is Revolutionized
Distribution Channels
The Internet:
Is a substitute for other forms of
communication.
Has radically changed buyer-seller
relationships.
Has changed the customer shopping
experience.
Has increased the power of consumers.
Objectives of Channel
Intermediaries
1.
2.
Efficiency: Distribution costs are reduced
only if the retailers can perform the required
functions more efficiently than the
manufacturers could in the direct channel.
Effectiveness: the ability of the channel to
perform functions that create value for
customers.
Disintermediation
A strategy that involves the elimination of a
channel intermediary.
Internet has become a driving force for
disintermediation
Overall result is positive because channel
works more closely to create value for
customers.
Designing Channel Systems:
The Distribution Levers
Intermediary Type
Direct
Traditional Retailers
Virtual Shopping Malls
Internet Exchange
Process: Designing
Distribution Channels
1.
2.
3.
4.
5.
Identify and evaluate consumer preferences
by segment.
Design a customer-based channel system.
Modify channel strategy based on firm
objectives and constraints.
Select channel intermediaries or partners.
Develop a channel feedback system.
Distribution Levers and the Four Key
Stages of Customer Relationships
Awareness
Exploration/ Expansion
Degree of Channel Integration
Number of Channels/ Intermediary Type
Commitment
Number of Intermediaries
Number of Channels/ Intermediary Type
Degree of Channel Integration
Intermediary Type
Number of Channels
Intermediary Functions and Responsibilities
Dissolution
Elimination of Channel Types
Reduction in the Number of Intermediaries
Reduction in Channel Integration
eBay’s Application of the Marketspace Matrix
eBay’s Application of the
Marketspace Matrix (1995-98)
eBay provides a logical first example of
Marketspace Matrix in action.
Since the product – an online auction service
– was completely new, its brand had little
value.
Thus branding levers were inapplicable at the
start.
Yet, eBay, even in its nascent phases,
developed levers in nearly every category.
eBay’s Application of the
Marketspace Matrix (1995-98)
Awareness
Exploration/ Expansion
Novelty of internet based, dynamic, auction-based pricing system
Benefits to both buyers and sellers
Low cost
Viral marketing and word-of-mouth
Strong presence at trade shows
Focus in one key area: website itself
Easy-to-use search engine and easy-to-explore community converted
visitors to customers.
With more converted customers, eBay fostered exploration and expansion
by the community equity that arose.
Commitment
Relied primarily upon the enabling community product lever to advance
users into the commitment phase.
eBay’s Application of the
Marketspace Matrix (1998-99)
Once eBay had advanced a significant
number of users into the exploration/
expansion phase, the firm needed to focus on
sustaining commitment.
As the firm’s needs changed, so did its
Marketspace Matrix.
eBay’s Application of the
Marketspace Matrix (1998-99)
Awareness
Began first major advertising campaign in late 1998.
Radio and print campaign with “You might just find it on eBay”
slogan
Strategic alliances with AOL.com and the now defunct Go.com
Sponsored auction of famous memorabilia for free media exposure
Exploration/ Expansion
Added new attributes and features
Offered complementary services
Improved existing services
Enhanced community offerings
Forums where veteran eBay users will answer questions of new
users
eBay’s Application of the
Marketspace Matrix (1998-99)
Commitment
Community enabling remains a constant product lever to
advance user to and sustain commitment.
Loyalty program where seller can earn “Power Seller” status.
Dissolution
Needed to dissolve relationships with customers who
damaged the community.
These were sellers who accepted bids and money and then
never delivered the goods as well as buyers who bid and
never paid.
Relied on community and feedback forum to dissuade users
from dealing with these miscreants.
eBay’s Application of the
Marketspace Matrix (2000-present)
Having nearly perfected its community and ability to retain
customers, eBay requires new buyers and sellers to continue its
history of growth.
Pursued international strategy through building international
sites and acquiring competitors.
To increase core business in the US, eBay has stepped up
efforts to win new users.
Television campaign in late 2000.
Promote ancillary services including a bill-paying service called
Billpoint which competes with PayPal, which allows anyone with
an email to receive a payment.
eBay’s Application of the
Marketspace Matrix (2000-present)
Awareness
Offering price promotions to sellers to encourage them to list
items for the first time – for free, provided they sign up for
and accept Billpoint.
Television ad campaign.
Exploration/ Expansion
Expansion of product categories to include real estate and
cars.
Added “buy it now” option.
Augment offerings, e.g. deal to provide discounted UPS
shipping to all eBay users through Mail Boxes Etc.