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Impact Of Internet On Marketing Marketing Essay

Internet marketing is an existing area to be involved with, since it poses many new opportunities and challenges yearly, monthly and even daily. Innovation is a given with the continuous introduction of new technology, new business models and new communications a[[parches. As a example, Google innovates relentlessly. Its service has developed a long way since 1998 with billions of pages now indexed and other services such as web-mail, pay-per-click adverts and social networks all parts of its offering. Table 1.1 to see other examples of the rate at which new innovations occur.

www.miomi.com

Table 1.1 : Timeline of websites indicating innovation in business model or marketing communications approach:

Year Founded

Company/Site

Category of innovation

1994

Amazon

Retailer

1995(March)

Yahoo!(Yahoo.com)

Directory/portal

1995(September)

eBay

Online auction

1996

Hotmail(hotmail.com)

Web-based e-mail, virtual marketing(Purchased by Microsoft in (1997)

1998

GoTo.com(goto.com)

Pay-per-click search marketing(Purchased by yahoo in 2003)

1998

Google(google.com)

Search Engine

1999

Blogger

Blog publishing platform(Purchased by Google 2003)

1999

Alibaba(alibaba.com)

B2B Marketing place with $1.7 billion IPO on Hong kong stoke exchange in 2007

1999

Myspace(myspace.com)

Social network

2001

Wikipedia

Open encyclopaedia

2002

Last.fm

A UK based internet radio and music community website

2003

Skype(skypee.com)

Peer-to-Peer voice telephony

2003

Second Life(secondlife.com)

Immersive virtual world

2004

Facebook

Social network applications and groups

2005

YouTube

Video sharing and rating

2007

Joost(joost.com)

Quality video broadcast service

2008

2009

2010

?

The future

?

2.2 Internet Marketing and multi channel marketing

To illustrate how different marketers perceive internet marketing. There is a range of terms used to describe internet marking- it is called different things by different people. It is important that within companies and between agency and client there is clarity on the scope of internet marketing. Internet marketing can be simply defined as ‘ Achieving marketing objectives through applying digital technologies.’ These digital media such as websites, e-mails as well as other digital media such as wireless or mobile and media for delivering digital television such as cable and satellite. Digital marketing is yet another term to internet marketing. It is a term increasingly used by specialist e-marketing agencies in recruitment of specialist staff and the new media trade publications such as New Media Age(www.nma.co.uk) and Revolution (www.revolutionmagazine.com).

2.3 Digital Marketing benefits

According to Chaffey and Smith from their book ‘Internet Marketing’ which gives a basic framework for reviewing the types of goals based on the 5 Ss and these are

Sell- Grows sales

It includes direct online sales and sales from offline channels influences online. Achieved through wider distribution to customers you cannot readily service offline or perhaps through a wider product range than in-store or lower prices compared to another channels.

Serve-Add value

It achieved through giving customers extra benefits online or inform product development through online dialogue and feedback. It increase interaction with different content on site as well as increase the number of customers actively using online services.

Speak- Get closer to customer

Creating a two way dialogue through web interactions like forums and surveys and conducting online marketing research through formal surveys and informally monitoring chat rooms to learn about them.

Save- Save costs

It achieved through online e-mail communications, sales and service transactions to reduce staff, print and postage costs. Saving also accrue through ‘web self-service’ where customers answers queries through online content. It generate almost 10% more sales for same communication budget and also reduce cost of direct marketing nearly by 15% through e-mail.

Sizzle- Extend the brand online

It can be achieved through providing new propositions, new offers and new experiences online while at the same time appearing familiar . I t improve branding metrics such as brand awareness, reach, brand favourability and purchase intent.

2.4 The internet micro environment:

All organisations operate within an environment that influences the performance of their business. Organisations that monitor, understand and respond appropriately to changes in the environment have the greatest opportunities to compete effectively in the competitive marketplace. Understanding an organisation’s environment is a key part of situation analysis for the internet marketing strategy development process which is a process for development and implementation of an internet marketing plan . There is also need for a process to continually monitor the environment, which is often referred to as environmental scanning. The internet introduces new facets to the environment that must be considers by the marketers since strategy development is strongly influenced by considering the environment the business operates in.

Many authors such as Porter on corporate strategy make the distinction between macro- and micro-environment. It is sometimes known as ‘ the operating environment ‘ is the immediate marketplace of an organisation. For Internet marketing strategy , the most significant influence are arguably those of the micro-environment. This is shaped by the needs of customers and how services are provided to them though competitors, intermediaries and upstream suppliers. The macro-environment influences are broader provided by local and international economic conditions and legislation together with what business practices are acceptable to society. The organisation’s marketing system often includes mechanisms for collecting and sharing data through an internet. For example, if marketers want to compare customer profiles with population statistics, they can download census information from the internet, save it a spreadsheet, then merge it with proprietary demographic statistics about the firm’s customer’s contained on its internet.

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Figure: The internet marketing environment(ref???)

2.2.1 Key components of the internet micro-environment:

A review of the suitability of the characteristics and capabilities of an organisation to make increased use of electronic communications should occur as part of developing internet marketing plans. This is sometimes known as the ‘ internal environment ‘ of the organisation. The key components of the internet micro-environment are giving below :

The marketplace

The Organisation

The Customers

The Suppliers

The Competition

The Intermediaries

a) The Marketplace:

Online marketplace analysis, competitive forces, from value chain to value network , new channel structures, location of trading, commercial arrangements for transactions, new business and revenue model.

Online marketplace analysis:

Analysis of the online marketplace or ‘marketspace’ is a key part of the developing a long-term internet marketing plan or creating a shorter-term digital marketing campaign. Completing a marketplace analysis helps to define the main types of online presence that are part of a ‘click ecosystem’ which describes the consumer behavior or flow of online visitors between search engines, media sites, or other intermediaries to its organization and its competitors. The marketplace map should show the types of sites and the relative importance of different online intermediaries in a particular marketplace. In a more advanced form, it could also show the flow of clicks between different customer segments and to different company site(s) and different competitors via the intermediaries. Companies then need to work out which sites are effective in harnessing search traffic and either partner with them or try to grab a slice of the search traffic. To help understand and summaries the online linkages between online business and traffic flows it is worthwhile producing an online marketplace map as shown below

image.png

Figure : An online marketplace map

The main members of the e-marketplace model are:

Customer segments.

Identify different segments to understand their online media consumption and the type of content and experiences they will be looking for from your website. Personas are used to understand the preferences, characteristics and online behaviours of different groups as described in link at bottom of page.

Search intermediaries.

These are the main search engines in each country. Typically Google, Yahoo! and Microsoft Live Search, but others are important in some markets such as China (Baidu) and Russia (Yandex). Use audience data from Comscore (www.comscore.com), Hitwise (www.hitwise.com), Nielsen Netratings (www.nielsennetratings.com) to find out their relative importance in your country. You will need to know the most important phrases using tools such as the Google Traffic Estimator and Google Keyword tool (referenced from the link below) and which sites the visitors are directed to. For example, in the financial sector, the intermediary MoneySupermarket is an important potential partner if you are offering these services. se.com)

Intermediaries and media sites.

Media sites and other intermediaries such as affiliates are often successful in attracting visitors via search or direct since they are mainstream brands. You should assess potential partners in the categories shown in the figure such as:Mainstream news media sites or portals (traditional, e.g. NYT.com, FT.com or Times or Pureplay, e.g. Google news an aggregator) Niche / vertical media sites, e.g. E-consultancy, ClickZ.com in B2B Price comparison sites (also known as aggregators), e.g. Moneysupermarket, Kelkoo, Shopping.com, uSwitch, etc. Superaffiliates. Affilates gain revenue from a merchant they refer traffic to using a commission based arrangement based on the proportion of sale or a fixed amount. They are important in e-retail markets, accounting for tens of percent of sales. Niche affiliates or bloggers. These are often individuals, but they may be important, for example, in the UK, Martin Lewis of Moneysavingexpert.com receives millions of visits every month. smaller affiliates and bloggers can be important collectively.

Destination sites

These are the sites that the marketer is trying to generate visitors to, whether these are transactional sites, like retailers, financial services or travel companies or manufacturers or brands. The figure refers to OVP or Online Value Proposition which is a summary of the unique features of the site which. The OVP is a key aspect to consider within planning – marketers should evaluate their OVPs against competitors and think about how they can refine them to develop a unique online experience.

b) The organisation

Need to audit the organisation’s capability to effectively use the Internet

Need to consider how well the organisation adapts to change

Need to look at both present and future factors

Need to be objective

The 7s’ model

The model starts on the premise that an organization is not just Structure, but consists of seven elements:

Those seven elements are distinguished in so called hard S’s and soft S’s. The hard elements (green circles) are feasible and easy to identify. They can be found in strategy statements, corporate plans, organizational charts and other documentations.

http://www.valuebasedmanagement.net/images/picture_mckinsey_7s.jpg

The four soft S’s however, are hardly feasible. They are difficult to describe since capabilities, values and elements of corporate culture are continuously developing and changing. They are highly determined by the people at work in the organization. Therefore it is much more difficult to plan or to influence the characteristics of the soft elements. Although the soft factors are below the surface, they can have a great impact of the hard Structures, Strategies and Systems of the organization.

Strategy: the plan devised to maintain and build competitive advantage over the competition.

Structure: the way the organization is structured and who reports to whom.

Systems: the daily activities and procedures that staff members engage in to get the job done.

Shared Values: called "superordinate goals" when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic.

Style: the style of leadership adopted.

Staff: the employees and their general capabilities.

Skills: the actual skills and competencies of the employees working for the company.

c) The Customer

Situation analysis related to customers is very important to setting realistic objectives, estimates for volumes of online customers and developing appropriate propositions for customer online. Customer related analysis can be divided into two. Firstly, demand analysis, which involves understanding the potential and actual volume of the visitors to a site and the extent to which they convert the outcomes on the site such as leads and sales. Secondly, we need to understand the needs, characteristics and consumer behaviour of users of digital channels, often collectively referred to as customer insight. As a result if this analysis, customer segment will be created which will be used develop targeting approaches as part of the strategy development described

Online consumer analysis

Is online consumer behaviour fundamentally different from offline consumer behaviour? Consumer behaviour online and offline has both similarities and differences. The e-commerce world is not as revolutionary as some would have us believe. For instances, the stages of the consumer decision process are basically the same whether the consumer is online or offline. On the other hand, the general model of consumer behaviour requires modification to take into account new factors.

Web site features include the content, design and functionality of the site. There are parallels in the analogy world. For instance, it is well known that consumer behaviour can be influenced by store design and understanding the precise movements of consumers through a physical store and can enhance sales if goods and promotions are arranged along the most likely consumer tracks.

For instance, because consumers almost invariably enter a store and move to the right, high margin items tend to be located there. And because it is known that consumers purchase fresh dairy products frequently, they are put at the back of grocery stores. Proper store design and precision tracking of consumers is not new - but its technical implementation on the web, its lowered cost, its ubiquity and its comprehensiveness on the web are new.

With respect to click stream behaviour, a number of researchers have argued that understanding the background demographics of Internet users is no longer necessary, and not that predictive in any event. In most studies of the consumer behaviour, background demographics account usually for less than 10% of the observed behaviour. Many believe instead that most important predictors of online consumer behaviour are the session characteristics and the click stream behaviour of the people online. The theory is that this information will enable marketers to understand what the consumer was looking for at each moment and how much were they willing to pay, allowing the marketers to precisely target their communications.

Click stream marketing takes maximum advantage of the Internet environment. It presupposes no prior knowledge of the customer and can be developed dynamically as customers use the Internet. It gives us the most comprehensive data that can be well transformed into useful information thereby providing us with the maximum benefit and enabling us to get much better results in terms of ROI. There are different models of online buyer behaviour that have been developed to help marketers developed to help marketers develop online services and communications compatible with this behaviour

a. Information/experience seeking behaviour models

b. Hierarchy of response buying process models

c. Multichannel buying models

d. Trust-based models

e. Social interaction communication models

a. Information/experience seeking behaviour models:

It is developed by Bettman(1979) and Booms and Bitner(1981). In these models process and interpret marketing stimuli such as the 4 ps and environmental stimuli according to their personal characteristics such as their culture, social group and personal and psychological make-up. Specific behavioural traits are evident on the internet. Studies show that the world wide web Is used quite differentially by different groups of people. Lewis identified five different types of web users of the internet which remain valid today

Directed information-seekers: These users will be looking product, market or leisure information such as details of their football club’s fixtures. They are not typically planning to buy online

Undirected information seekers: These are the users, usally referred to as ‘surfers’, who like to browse and change sites by following hyperlinks. Members of this group tend to be novice users and they may be more likely to click on banner advertisements.

Directed buyers: These buyers are online to purchase specific products online, for such users, brokers or cybermediaries that compare product features and prices will be important locations to visit.

Bargain hunters: These users want to find the offers available from sales promotions such as free sample or competitions.

Entertainment seekers: These are users liking to interact with the web for enjoyment through entering contests such as quizzes, puzzles or interactive multi player game.

b. Hierarchy of response buying process models

An alternative view of customer behaviour is using the internet during different stages of the buying process relates to the well-documented ‘hierarchy of response model’, summarized for example by Kotler et al.(2001), as made up of the following stages

Awareness

Interest

Evaluation

Trial

Adoption

Breitenbach and van Doren (1998) also suggest that audience members of an individual website tend to pass through these stages, while chaffy and smith (2008) describe them as

Problem reorganisation

Information search

Evaluation

Decision

Action

Post purchase

c. Multichannel buying models

Users journey on the website is only part of a wider customer experience which involves multiple channels. The importance of multichannel strategies should also be built into assessing customer behaviour and their perception of the online customer experience. Identifies consumer behaviour by experience & perceptions of various channels

Explorers

Offroaders

Drive-bys

Cruisers

d. Trust-based models

Online, purchasers lack the physical reassurance we have when purchasing from a store or talking to someone over a phone. This is compounded because of stories of fraud and security problems. It follows that consumers are looking for cues of trust when they are on a site and marketers needs to understand the nature of these. These cues can include brand familiarity, site design, the type of content, accreditation and recommendation by other customers. When reviewing products on a destination site, web users will differ in their decision making style which will vary according to their knowledge of the web and their attitude to risk and trust. To evaluate these issues, a useful framework has been developed by Forrester for the financial services market to segment customers. This is summarised in the following figure . It shows that how customers will generally fall into groups, first based on tthose who gather detailed information and those who rely on less information and then based on those who value advice from advisers.

Ignore Advisors Depend on advisors

‘do it yourself’ ‘ do it with me’

Figure: Segmentation based on information need and trust

e. Social interaction communication models:

In this section, it has been emphasised the way in which digital media dramatically increased the role of recommendations from other consumers. It has been seen that many of the Web 2.0 approaches involve participation and sharing of information between different applications. The human wish to socialise and share experience is the real reason behind he popularity of Web 2.0 sites, such as the social network.

c. Competitors:

The nature and volume of the competition has changed by the evolution of the internet. In the modern dynamic world, competitor analysis and benchmarking of competitor become important in the internet marketing. According to Portes(2001), this dynamism allow new services to be initiate with using different types of marketing mix. The significance of this dynamism is not a single day activity while establishing a strategy but its need to be continuous. On the other hand, competitor benchmarking is a term which is used for structured comparison of digital marketing of an organisation within a market. If any changes occur to competitor is identified by it. Along with that it is very helpful for the strategist to identify the opportunities for strengthen a company’s own web services compare to non-competing companies.

d. Suppliers

This factors has less impact on internet marketing rather than others. The most important situation for suppliers in the context of internet marketing is for identify the value of product or service deliver to the end of the customer.

e. Intermediaries:

Some examined have done on the result of the internet on traditional intermediaries by some researchers. According to Peterson, Balasubramanian and Bronneberg(1997), they explained how the internet might be influenced by three types of channels. These are distribution channels, transaction channels and communication channels. They argue that the potential that the Internet

offers for efficiency improvements in channel functions will obviously vary across the

three types of intermediaries. Specifically, the logistic functions of distribution

intermediaries are probably least dependent on the existence of the Internet except for information goods such as software that can be distributed via the Internet; transaction channel intermediaries will probably be more affected by the existence of the Internet because it will be possible for sellers to efficiently interact with individual buyers and potential buyers; communication channel intermediaries will probably be the most affected by the existence of the Internet. Benjamin and Wigand (1995) maintain that the Internet has the capacity to “eliminate retailers and wholesalers entirely.” Although under certain conditions the Internet will probably cause some degree of disintermediation because of the distribution, transaction, and communication functions it can facilitate for some products and services, on the other hand, the Internet may also lead to more channel intermediaries, such as rating services, automated ordering services, and order consolidation services (Peterson, Balasubramanian and Bronnenberg 1997). Similarly, Sarkar, Bulter and Steinfield (1998) also emphasize the importance of intermediaries in the Internet-based markets. They state that cybermediaries, such as gateways, directories, search services, online retailers, and online publishers, can serve as an efficient mechanism for supporting the diversified commercial exchanges on the Internet.

The internet macro environment

The macro-economic factors can influence the way in which the internet is used to support marketing. In this report SLEPT framework is widely used. SLEPT stands for social, legal, economic, political and technological factors. These factors is well known as PEST. The PEST factors are:

Social Factors

It include the influence of consumer perceptions in determining usage of the internet for different activities. There are some social barriers to adoption of the internet include:

No perceived benefit

Lack of trust

Security problems

Lack of skills

Cost

These factors combine to mean that there is a significant group in each national population of at least a quarter of the population that does not envisage ever using the internet. Clearly, the lack of demand for internet services from this group needs to be taken into account when forecasting future demand and from an ethical perspective we should think how to avoid social exclusion.

Legal and ethical issues of internet usage:

Ethical standards are personal or business practices or behaviours which are generally considered acceptable by norms of society. Ethical issues and the associated laws developed to try to ensure an ethical approach to internet marketing is an important consideration of the internet business environment for marketers. Many laws have been enacted to prevent unethical marketing practice, so marketers have to understand and work within this regulation framework. There are some significant laws which control digital marketing

Data protection and privacy law

Collection, storage, usage and deletion of personal information directly through data capture on forms and indirectly through tracking behaviour through web analytics.

E-mail marketing and SMS mobile marketing

Use of viral marketing to encourage transmission of marketing message between consumers

Use of cookies and other techniques for personalising content and tracking on site.

Use of cookies for tracking between sites, for example advertising networks

Use of digital assets installed on a user’s PC for marketing purposes.

Disability and discrimination law

Accessibility of contents such as images for the visibility impaired within digital environments

Website

e-mail marketing

mobile marketing

IPTV

Accessibility affecting other forms of disability including hearing difficulties and motor implements

Brand and trademark protection

Use of trademarks and brand names within

Domain names

Content on site

Paid search advertising campaigns

Representation of a brand on third-party sites including partners, publishers and social networks.

Defamation of employee

Intellectual property rights

Protection of text assests such as text content, images, audio, and sounds through digital rights management.

Contract Law

Validity of electric contracts relevant to

Cancellations

Returns

Errors of pricing

Distance selling law

International taxation issues where the e-commerce service provider is under a different tax regime to the purchaser.

Online advertising law

Similar issues of traditional media

Representation of offer

Causing offence

Technological factors

Marketers needs to understand the basic idea of internet technology and terminology so that they can discuss with agencies and technical staff how human behaviour can be evaluated online through analysis as customers respond to different messages on third party sites such as affiliates or adverts on publisher site. There are some technological factors those are effecting digital marketing and these are

Web security:

Web security technology, which is like privacy , a major concern for internet users that needs to concern and understand by site owners and marketers to ensure sites are secure and that consumers can reassured about security. For a customer or merchant point of view, these are the main security risks involved in an e-commerce transactions

Customer details or passwords accessed on user’s computer such as through key logging software or malware

Transaction or credit card details stolen in transit, e.g. through ‘packet sniffing software’.

Customer’s credit card details stolen from the merchant’s server for example through hacking.

Customer’s details accessed by company staff

Merchant or customer are not who they claim to be.

Mobile or Wireless access devices:

Internet mobile access devices that site owners and e-mail marketers need to consider support for their communication include

Mobile phones using short-code response to campaigns or interactive sites based on WAP or used of rich media streaming supported by broadband 3G technology.

Personal Digital Assistants or smart phones such as blackberry and windows mobile ‘pocket PC’ phones.

Traditional PCs accessing the web over wi-fi.

Gaming platforms with a lower screen resolution accessing the web via wi-fi such as Nintendo DS lite or Sony Playstation Plus.

Economic factors:

The economic prosperity and competitive environment in different countries will determine the e-commerce potential of each country. Managers developing e-commerce strategies will target the countries that are most developed in the use of the technology. Knowledge of different economic conditions is also part of budgeting for revenue from different countries.

The trend to globalisation can arguably insulate a company, to same extent, from fluctuations is regional markets, but is of course, no protection from a global recession. Managers can also study e-commerce in leading countries to help predict future e-commerce trends in their own countries. Language and cultural understanding may also present a problem, and a small or medium sized company unlikely to prossess the resource develop a multi-language version of its site or employ staff with language skills.

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Political factors

The political and regulatory environment is shaped by interplay of government agencies, public opinion and consumer pressure groups such as CAUCE(the coalition against unsolicited e-mail) which were active in the mid-1990a and helped in pressurising for laws, and industry backed organisations such as TRUSTe that establishing the laws to ensure privacy and to collect taxes .Political action enacted through government agencies to control the adoption of inter can be conclude

Promoting the benefits of adopting the internet for consumers and business to improve a country’s economic prosperity.

Sponsoring research leading to dissemination of best practice among companies. For example, the DTI international benchmarking survey.

Enacting legislation to regulate the environment, for example to protect privacy or control taxation.

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2.4 Current Status of digital marketing and future plan

In this decade the information retrieval research community has started new relevant efforts to improve previously available evaluation techniques and methods and to address new ones. Evaluation techniques are critical to research in all areas of science and engineering, so they are for the information retrieval area. The evaluation of information retrieval systems can take different approaches, face different issues, and propose or use different methods. Different access platforms deliver content and enable interaction through a range of different online communication tools or media channels. Some are well established techniques which will be familiar like website, search engines, e-mail and text messaging. One of the most exciting things about working in digital media is the introduction of new tools and technique which to be assessed for their relevance to a particular marketing campaign. For example, recent innovations like blogs, feeds, podcast and social networks

Web 2.0

Since 2004, the web 2.0 concept has increased in prominence among website owners and developers. The main technologies and principles of web 2.0 have been explained in an influential article by Tim O’Reilly(2005). Behind the label, web 2.0, lies a bewildering range of interactive tools and social networks. Web 2.0 also references methods of exchanging data between sites in standardized formats, such as the feeds merchants use to supply shopping comparison sites with data about products offered and their prices

The main characteristics of web 2.0 are giving below

Web services or interactive applications hosted on the web such as Flicker(www.flicker.com), Google Map(http://maps.google.com) or blogging services such as Blogger.com

Supporting participation- many of the applications are based on altruistic principles of community participation

Encourage creation of user generated contents- blogs and Wikipedia are best example of this.

Enabling rating of content and online services- services as delicious (www.del.icio.us) and trace back comments on blog support this.

Ad funding of natural sites- web services such as Google Mail/Gmail and many blogs which are based on contextual advertising such as Google Adsence.

Data exchange between sites through XML-based data standards, RSS is based on XML, but has relatively little semantic markup to describe the content.

Use a rich media or creation of rich internet application(RIA) which provide for a more immersive, interactive experience. These may be integrated into web browsers or may be separate applications like that downloaded for second ife.

Web 3.0

his will be about semantic web (or the meaning of data), personalization (e.g. iGoogle), intelligent search and behavioural advertising among other things.

Web applications- Usage of web-based applications and services( like Google word processor and spreadsheet) using the web in this way is sometimes termed ‘ cloud computing’ where all that really needed for many activities is a computer with a web browser with local software applications used less widely.

Syndication- Increased incorporation of syndicated content and services from other sites or a network into a site.

Streamed video or IPTV- Increased use of streamed video from existing TV providers and users generated content.

Virtual worlds- Increased use of immersive virtual environments such as Second life.

Personal data integration- Increased exchanged of data between social networks fulfilling different needs.

The semantic web- Increased use of semantic markup leading to the semantic web envisioned by Tim Berners-Lee over 10 years ago. It seems semantic markup will be needed to develop artificial interrigence applications which recommended content and services to web users without them actively having to seek them and apply their own judgement as to the best products and brands.


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