INMA_A01.QXD

GUIDED TOUR

keting their products will vary markedly according to product type. In some, such as carsThe figure suggests that the way companies should use digital technologies for mar-

and complex financial products such as mortgages, the main role of online marketingwill be to support research, while for standardised products like books and CDs there

will be a dual role for the web in supporting research and enabling purchase.

The use of the Internet and other digital media to support marketing has been granted abewildering range of labels by both academics and professionals. In this section we review

some of the different definitions to help explain the scope and applications of this newform of marketing. Before we start by defining these terms, complete Activity 1.1 which

considers the relative popularity of these terms.

What, then, is Internet marketing? Internet marketing can be simply defined as:

Achieving marketing objectives through applying digital technologies.

that should determine investment in Internet marketing, not the adoption of the tech-This succinct definition helps remind us that it is the results delivered by technology

nology! These digital technologies include Internet media such as web sites and e-mail aswell as other digital media such as wireless or mobile and media for delivering digital

television such as cable and satellite.

What is Internet marketing?

Activity 1.1 What’s in a term – what do we call this ‘e-thing’?

PurposeTo illustrate how different marketers perceive Internet marketing.

Question

There are a range of terms used to describe Internet marketing – it is called different things bydifferent people. It is important that within companies and between agency and client there is

clarity on the scope of Internet marketing, so the next few sections explore alternativedefinitions.

One crude, but revealing method of assessing how commonly these terms are used, is to usethe Google syntax which returns the number of pages which contain a particular phrase in

their body or title.

Type into Google the following phrases in double quotes or use intitle: “phrase” for thesephrases and note the number of pages (at the top right hand of results page):

Phrase“Internet marketing”

“E-marketing”“Digital marketing”

“E-business”“E-commerce”

Internet marketingThe application of the

Internet and relateddigital technologies in

conjunction withtraditional

communications toachieve marketing

objectives.

visit the

w.w.w.

Examples which illustrate the importance of value networks to Internet marketing are theaffiliate networks and ad networks described in Chapter 8. Rather than working directly

with individual publishers to drive visitors to a site, an online merchant will work withan affiliate network provider such as Commission Junction (www.cj.com) or ad network

such as Miva (www.miva.com) which manages the links with the third parties.

New channel structures

Channel structuresproducts and services to its customers. The distribution channel will consist of one ordescribe the way a manufacturer or selling organisation delivers

more intermediaries such as wholesalers and retailers. For example, a music company isunlikely to distribute its CDs directly to retailers, but will use wholesalers which have a

large warehouse of titles that are then distributed to individual branches according to

MARKETPLACE

Figure 2.6Source: Adapted from Deise et al. (2000)Members of the value network of an organisation

Core value chainactivities

Strategic core VC partners

Non-strategic service partners

*includes IS partners, for example:
Strategic outsourcer



System integratorISP/WAN provider


ASP provider

Manufacturing

Value chain integrators*

Inboundlogistics warehousingProduct

resourcesHuman

Value chain integrators*

e.g. travelAdmin

Fulfilment

DownstreamVC partners

intermediariesSell-side

Suppliers

VC partnersUpstream

intermediariesBuy-side

Finance

Channel structureThe configuration of

partners in adistribution channel.

channels or (3) achieving reach to enhance brand awareness, favourability and pur-chase intent through ads and sponsorships on third-party sites. Building brand

awareness, favourability and purchase intent on third-party sites may be a more effec-tive strategy for low-involvement FMCG brands where it will be difficult to encourage


visitors to the site.Offline targeted reach strategy– the objective is to encourage potential customers to use

online channels, i.e. visit web site and transact where relevant. The strategy is to com-municate with selected customer segments offline through direct mail, media buys,


PR and sponsorship. Online sales efficiency strategy– the objective is to convert site visitors to engage and

become leads (for example, through registering for an e-newsletter or placing the firstitem in the shopping basket) to convert them to buy products and maximise the pur-


chase transaction value.Offline sales impact strategy– the aim is to achieve sales offline from new or existing

customers. Strategy defines how online communications through the web site ande-mail can influence sales offline, i.e. by phone, mail-order or in-store.

Tesco.com uses the Internet to support its

Case Study 4 diversification strategy



ContextTesco, well known as Britain’s leading food retail group

with a presence also in Europe and Asia has also been apioneer online. By September 2005 online sales in the first

half of the year were £401 million, a 31% year-on-yearincrease, and profit increased by 37% to £21 million.

Tesco.com now receives 170,000 orders each week. Soonit should reach an annual turnover of £1 billion online

and is generally recognised as the world’s largestonline grocer.

Product rangesThe Tesco.com site acts as a portal to most of Tesco’s

products, including various non-food ranges (for example,books, DVDs and electrical items under the ‘Extra’

banner), Tesco Personal Finance and the telecoms busi-nesses, as well as services offered in partnership with

specialist companies, such as dieting clubs, flights andholidays, music downloads, gas, electricity and DVD

rentals. It does not currently sell clothing online but in May2005 it introduced a clothing web site (www.clothing

attesco.comand link customers to their nearest store with this range.), initially to showcase Tesco’s clothing brands

CompetitorsTesco currently leads the UK’s other leading grocery retail-

ers in terms of market share. This pattern is repeatedonline. The compilation below is from Hitwise (2005) and

the figures in brackets show market share for traditionaloffline retail formats from the Taylor Nelson Softres Super

Panel (see http://superpanel.tns-global.com).

12 Tesco Superstore, 27.28% (29% of retail trade)ASDA, 13.36%

34 ASDA @t Home, 10.13% (17.1%)Sainsbury’s, 8.42%

56 Tesco Wine Warehouse, 8.19%Sainsbury’s to You, 5.86% (15.9%)

78 Waitrose.com, 3.42% (3.6%)Ocado, 3.32% (owned by Waitrose, 3.6%)

109 Lidl, 2.49% (1.8%)ALDI – UK, 2.10% (2.3%)

the online shopping site are reported on separately.Some companies are repeated since their main site and

Asda.com now seems to be performing in a consistentmanner online to its offline presence. However, Sainsbury’s

online performance seems to be significantly lower com-pared to its offline performance. Some providers such as

Ocado which originally just operated within the Londonarea have a strong local performance.

from the Hitwise listing since their strategy has been toNotably, some of Tesco.com’s competitors are absent

focus on retail formats. These are Morrisons (12.5% retailshare), Somerfield (5.5%) and Co-op (5.0%).

Promotion of serviceAs with other online retailers, Tesco.com relies on in-store

advertising and marketing to the supermarket’s Clubcardloyalty scheme’s customer base to persuade customers

to shop online. marketing director at Tesco.com, as saying: ‘New Media Age(2005) quotes Nigel Dodd,These are

invaluable sources as we have such a strong customerbase’. However, for non-food goods the supermarket

does advertise online using keyword targeted ads.

Brand identity

Aaker and Joachimsthaler (2000) also emphasise the importance of developing a plan tocommunicate the key features of the brand identityand increase brand awareness. Brand

identity is again more than the name. These authors refer to it as a set of brand associa-tions that imply a promise to customers from an organisation. See Mini Case Study 5.1

to see the different elements of brand identity which are effectively a checklist of whatmany e-tailers are looking to achieve.

26

Brand identityThe totality of brand

associations includingname and symbols that

must becommunicated.

Aaker and Joachimsthaler (2000) suggest that the following characteristics of identity need to be definedat the start of a brand building campaign. Marketing communications can then be developed that create

and reinforce this identity. Here, we will apply them to Napster which is revisited in the main case studyat the end of this chapter.


Brand essence (a summary of what the brand represents)This is not necessarily a tag line, but for Napster it has been described as an ‘All you can eat music

service which is fun and affordable’

Mini Case Study 5.1 Napster.com’s brand identity

Figure 5.5Napster.com

Mini Case

Studies

encourage

debate and

classroom

discussion.

Full colour screenshotsfrom

genuine web sites help bring

theory to life.

Activitiesgive readers the opportunity

to practise and apply the techniques

described in the text.

Figuresand

tables

illustrate key

concepts and

processes,

visually

reinforcing

your learning.

Case Studies

are positioned

at the end of

each section,

showcasing

relevant

theories and

themes.

Margin

definitions

help

emphasise

the concepts

covered in the

body of the

text.

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