CHAPTER 4THE INTERNET AND THE MARKETING MIX

NUR AQILAH BINTI ZAINUDIN2014416824BM240 3B

LEARNING OBJECTIVES

• Apply the elements of the marketing mix in an online context

• Evaluate the opportunities that the Internet makes available for varying the marketing mix

• Assess the opportunities for online brand-building

INTRODUCTION

• Show how the well-established strategic framework of marketing mix can be applied by marketers to inform their digital marketing strategy.

• It explores this key issue of digital marketing strategy in more detail.

• As well as the marketing mix, online branding is another major topic.

What is Marketing Mix?

Widely refered to4P’s of Product, Price, Place and

Promotion by Jerome McCarthy (1960)

Extended to 7P’s which include people, processes and physical evidence by Booms and Bitner,

(1981)

8th P online is the partnerships

ELEMENTS OF MARKETING MIX

The 4Ps and 4Cs

Product

Price

Promotion

Place

Cost

Communications with company

Customer needs andwants

Customer convenience

PRODUCT

Product Variable=========

Element of marketing mix that involve

researching customer needs and develop

appropriate product

Extended Product=========

Additional features and benefits beyond the

core product

Core Product=========

The fundamental features of product that

meet users needs

OPTIONS FOR VARYING THE CORE PRODUCT

Can I offer additional information or transaction services to existing customer

Can I address the need of new customer segments by repackaging current info by

new business propositions

Use ability to attract customer to generate new sources revenue or sales.

Will my current business be significant harmed by other company.

OPTIONS FOR OFFERING DIGITAL PRODUCTS

• Traditional publisher revenue model

• Different period at different price point

* Fee for single download/ viewing session at higher

relative price than the subscription

* Different channels/content can be offered as individual

product/ group at reduce price

• No direct price set yet• Revenue source through

adverts on site

Subscription

Ad supported contentBundling

Pay-per-view

OPTIONS FOR CHANGING THE EXTENDED PRODUCT

endorsements awards testimonies

Customerlists

Customercomment warranty guarantee Money

back

Customer service

Incorporating tools to help user during their use of

product

CONDUCTING RESEARCH ONLINE

Online focus group=========Compare

customers experience of product use

Online questionnaire

survey=======

Focus on site visitor experience,

can include question

Customer feedback / forums======

Comment post to site

Web Analytics=========

Response data from e-mail

The internet provides a platforms which enable new product to be developed more rapidly as it is

possible to test new ideas, concept or explore different

product through online market research.

= The law of the few = The stickiness factors= The power of context

VELOCITY OF NEW PRODUCT DEVELOPMENT

VELOCITY OF NEW PRODUCT DIFFUSION

BRANDS

Branding=========

Process of creating and evolving

successful brand

Brand=========Sum of the

characteristic of product/service perceive by user

Characteristic of successful brand=================

1. Brand is dependent on customer perception

2. Perception influence by added-value characteristic

3. Added-value need to be sustainable

Brand experience=========

Frequency and depth of interactions with a

brand can enhance through internet

Brand equity=========

Asset/liabilities linked to a brand name and symbol

that add to a service

Traditional measures of brand equity and online measures of brandequity

SUCCESS FACTOR FOR BRAND SITES (METHOD ENCOURAGE VISITOR TO RETURN)

Create a compelling, interactive experience including rich media which reflects the brand

Consider how the site will influence the sales cycle by encouraging trial

Developing an exchange programmed on website to begin conversation with most valuable customer

segment

Brand identity========

Totality of brand association including

name and symbol that must be communicated

Brand names for online brand

===========* Should be simple.

Distinctive, meaningful and compatible with

product

Rules for naming online brand

===========• Law of the common

name• Law of proper name

PRICE

Price variable======

Element of marketing mix that involve defining

product price and pricing models

Pricing models======

Form of payment such as outright purchase,

rental, volume purchase

INCREASED PRICE TRANSPARENCY

Price Transparency=============

Customer knowledge about pricing increases due to increases availability of

pricing information

Differential pricing============

price different for different types of customer, market

and buying situation.

Price elasticity of demand ============

Measure of CB based on economic theory

DOWNWARD PRESSURE ON PRICE

Precision ============

each product has a price indifference band where

varying price has little or no impact on sales.

Adaptability ============

respond more quickly on demand of marketplace with

online pricing

segmentation ============

pricing differently for different groups of customers

RANGE OF OPTION FOR SETTING PRICING

Competition-based

pricing

Cost-pluspricing

Market-Orientedpricing

Target profit

pricing

NEW PRICING APPROCHES

DYNAMIC PRICING = price can be updated in real time according to the type of

customer or current market conditions.

SHIPPING FEES = dramatic effect both on conversion rates

and ability according to research completed by Lewis et

al. (2006)

ALTERNATIVE PRICING STRUCTURE OR POLICIES

Pricing options which could be varied online

include ==============

Basic priceDiscounts

Add-ons and extra products and services

Guarantees and warranties

Refund policiesOrder cancellation

terms

Online retailer should ask following question when reviewing pricing online

============================1. How many competitors are there at a point

in time?2. What is the position in PLC

3. What is the price sensitivity or elasticity of a product?

4. Are we stuck in the middle?

NEW PRICING APPROACHES

PLACEPLACE OF PURCHASE

Seller-controlled sites are those that are the

main site of the supplier company which are e-commerce enabled.

Seller-oriented sites are controlled by third

parties, but are representing the seller rather than providing a

full range of options

C. Neutral sites are independent evaluator

intermediaries that enable price and

product comparison and will result in the

purchase being fulfilled on the target site.

Seller-oriented sites are controlled by third

parties on behalf of the seller.

Seller-controlled sites usually involve either procurement

posting on buyer-company sites or those of intermediaries that have been set up in such a way that it is the buyer who initiates

the market making.

NEW CHANNEL STRUCTURES

Disintermediation = digital marketers should ask themselves the questions.

Reintermediation = the new intermediaries created through

reintermediation.

Countermediation = the strategic options to make better use of online

intermediaries.

CHANNEL CONFLICT

Different forms of channel the internet can take==================

1. A communication channel only

2. A distribution channel to intermediaries

3. Direct sales channel to customers

4. Any combination of above

Strategic option when existing reseller arrangement

in place=====================

1. No internet sales2. Internet sales by reseller

only3. Internet sales by

manufacture only4. Internet sales by all

VIRTUAL ORGANIZATIONS

Features of virtual organizations==============

1. Processes transcend theboundaries of a single form and

are not controlled by a single organizational hierarchy.

2. Production processes areflexible, with different parties

involved at different times.3. Parties involved in the

production of a single product are often geographically dispersed.

4. Given this dispersion, co-ordination is heavily dependent

on telecommunications and data networks.

DIFFERENT STRUCTURE FOR VIRTUAL ORGANIZATION

CO-alliance model=======

Effort and risk share equally by partners

Star alliance model=========

Effort and risk centered on 1 organization that

sub-contract other virtual partner

Value alliance model=========

Partnership where all element contribute across supply chain

Market alliance model===========

Similar to value alliance, but more

likely to serve differ marketplace

PROMOTION

How marketing

communications are used

to inform customers and

other stakeholder about

organization and product Elements of promotional mix ====================

1. Advertising2. Selling

3. Sales promotion4. Public promotion

5. Sponsorship6. Direct mail7. Exhibitions

8. Merchandising9. Packaging

10. Word-of-mouth

PEOPLE

PEOPLE variable

=====

Element of

marketing mix that

involves the

delivery of service

to customer during

interactions with

customer

Stages in managingInbound e-mail

PROCESS

REFERS to the method and procedure

companies use to achieve all marketing

function

Customer contact strategy

Customer- preferred channel

Company- preferred channel

PHYSICAL EVIDENCE

Physical evidence variable=========

Elements of the marketing mix that involves the tangible expression it is

purchased and used.

SUMMARY

• Evaluating the opportunities provided by internet for varying the marketing mix is a useful framework for assessing current and future digital marketing strategy

• Product. The product that will be sold which is a core product through the medium of web or new information based

• Price. Internet leads to the price transparency and commoditization.• Place. Place of purchase and channel structure on internet• Promotion. The medium uses to promote the product in a web• People, process and physical evidence.