E-, M- AND INTERNET MARKETING

Marketing Practice

Lecture Objectives

By the end of this lecture, you should be able to:

Distinguish between “e”, “m” and “internet” marketing

Identify a range of factors driving businesses and consumers to utilise new media

Identify ways in which businesses have changed their marketing and general business operations due to the use of new media

Pros and Cons of Using Technology

New Entrants

Substitutes

BuyersSuppliers

Entry & Substitution Barriers Reduced:•Less need for physical assets•More difficult to protect adv.•New entrants in many industries•Easier substitution

Rivalry Increased:•Reduced differentiation•Increased price competition•Wider geographic market•Lower variable costs hence more discounting

Supplier Power Reduced:•Raises bargaining power over suppliers•Wider information available•Internet procurement gives equal market access

Buyer Power Increased:•Wider information available•Reduces switching costs•Bargaining power shifts to end users•Powerful channels eliminated

Industry

Rivalry

Porter (2001)

Definition of Internet Marketing

Internet marketing

“Use of the internet and related digital technologies to achieve marketing objectives” (Chaffey, Mayer, Johnston & Ellis-Chadwick, 2003, p.7)

Acquiring and delivering services to customers

External perspective

Virtually Enhanced Industries

Auction – eBay, Bidup, Froogle, Amazon, Yahoo!,

Banking - direct debit/ EBPP, online accounts, First Direct, IF

Gambling – 888, BetfairGaming – Xboxlive, PSP, MMORPG,

MMORTSTravel & Tourism – lastminute, opodoRecruitment – fish4, Monster, StepStoneInsurance – Direct Line, MoneySupermarketLocal Economies (LETS) – Ripple, Peanuts-

Japan, Green Dollars=NZ

#10. Internet as a Distribution Channel

Definition of E-Marketing

E(lectronic) marketing

Use of technology in all its forms Internet, databases, call centres,

CRM etc. Internal and external focus Includes all aspects of the

marketing process Sometimes definitions focus on

internet aspects of e-marketing

Definition of M-Marketing

M-Marketing

“Is the process of planning and execution conception, pricing, promotion, and distribution of products and services through the mobile channel”

(Innovative Interactive…, cited by Leppäniemi and Karjaluoto (2005, P.198)

Useful for collecting data Allows delivery of personalised

messages Can be used as a distribution

channel similar to internet

M-Marketing Examples

McDonalds linking with Japanese mobile phone company to allow customers to pay via mobile

Orange Wednesdays involved the distribution of “m-vouchers” to consumers for redemption at box office

Technology and Marketing

Technology has affected marketing in a number of ways. For example;

Products Increasing speed, acceptance and expectation(?) of

innovation

Promotion Increasing media fragmentation Increased opportunities for information capture and

manipulation

Technology and Marketing

Place New distribution channels

Price New technology becomes cheaper and

more accessible, both B2C and B2B Use of technology allows prices of

various offerings to be decreased

Will concentrate on promotion and place

Internet as a Distribution Channel

Both goods and services distributed via the internet Absence of channel members means that prices are reduced

Intangible nature of services means internet is perfect for their distribution

E.g., list on slide 4, entirely made up of services #4. Virtually Enhanced

Industries

Increasingly goods are being distributed via the net Relies on postal services for delivery Ease and convenience are attractive to many consumers

Types of Distributors in Internet Age

Click only companies, including

E-tailers, selling direct to end user via net, e.g., Amazon

Transaction sites, allow different users to conduct business, e.g., eBay, Betfair

Search engines and portals, allow search and include other services such as news, etc….,

Content sites, e.g., BBC.co.uk

Click-and-mortar Brick and mortar retailers who have added an internet

marketing aspect, e.g., Tesco

Role of Intermediaries

New types of intermediaries

Brick-and-mortar firms often face disintermediation from click-only competitors

The click-and-mortar business model has been highly successful

Disintermediation

Disintermediation of a consumer distribution channel showing: (a) the original situation, (b) disintermediation omitting the wholesaler, and (c) disintermediation omitting both wholesaler and retailer

Reintermediation

“Disintermediation is the elimination of traditional links in the distribution chain between seller and ultimate buyer

Reintermediation is the creation of new intermediaries or market markers.” (Berthon, Ewing, Pitt and Naude, 2003, P.555)

E.g.,Tesco Direct or Confused.com

Partly driven by the success of click only companies,

Also affected by information overload of consumers

One Advantage of Online Retailing

Bricks and mortar shops have limited physical space

Therefore will stock only those items likely to sell most

Less popular, niche or older items will loose out on shelf space

Online is different

The Long Tail

Increased ability to hold stock, especially if stored electronicallyLarger potential customer baseCombined together, result in potential profit from “The Long

Tail”

Anderson (2004)

Marketing Communications and Technology

Technology has affected marketing communications in a number of ways

Increasing numbers of media channels (e.g., internet, digital TV) has lead to audience fragmentation

Allows more interaction, both business to consumer and consumer to consumer

Allows for improved market segmentation and targeting

Interaction

Two way nature of communications technology means interaction is more possible

Organisations gather data and try to create dialogue with consumers

Some consumers happy to interact with some organisations, more prefer to interact with each other Remember “Trialogue”? (Walmsley, 2007) Blogs, forums

etc…, Viral marketing seeks to take advantage of this Charmin

viral

Segmentation and Targeting

Improvements in technology allow for organisations to collect better customer data E.g., organisations that previously sold through

intermediaries can now collect information directly from consumers

Also increasingly sophisticated and lower cost databases allow more to be done with the data

Segmentation and Targeting

Who is the most likely person to shop online, defined by: Age Gender Occupation Socio-Economic status Location Behaviour / Preferences

Goods / Services sought

Brengman et al, (2003)

Online shopper Online shopper typologies:typologies:• Tentative Tentative

shoppersshoppers• Suspicious Suspicious

learnerslearners• Shopping loversShopping lovers• Business usersBusiness users

Online Online Non-shopperNon-shopper typologies:typologies:• Fearful browsersFearful browsers• Positive Positive

technology technology muddlersmuddlers

• Negative Negative technology technology meddlersmeddlers

• Adventurous Adventurous browsersbrowsers

Metrics on the Internet

Other information sources also available to organisations

Some are new, others are taking advantage of new ways of communicating IDC Home

Blogs, forums, etc…, used by practitioners and by subject specialists , Usually to support their other commercial activities

Drayton Bird

References

Anderson, C., (2004), The Long Tail [Electronic version], Wired Magazine, 10, 170-177.

Berthon, P., Ewing, M., Pitt, L. & Naude, P. (2003) Understanding B2B and the Web: the acceleration of coordination and motivation [Electronic version], Industrial Marketing Management, 32, 553-561

Brassington, F. and Petit, S., (2006), Principles of Marketing, 4th ed, Harlow, FT Prentice Hall

Chaffey, D., Mayer, R., Johnston, K. & Ellis-Chadwick, F., (2003) Internet Marketing: Strategy, Implementation and Practice, Second Edition, Harlow, Prentice-Hall

Leppäniemi, M., & Karjaluoto, H., (2005), Factors influencing consumers’ willingness to accept mobile advertising: a conceptual model [Electronic version], International Journal of Mobile Communications, 3 (3), 197-213

Porter, M.,(2001), Strategy and the Internet [Electronic version] Harvard Business Review, (3) 62-78.

Walmsley, A., (2007, June 13th), Democracy overpowers deific brands, Marketing, 17.