Market share growth– companies can compete more effectively online if they have web
sites that are efficient at converting visitors to sale as explained in Chapter 7 and mas-
tery of the online marketing communications techniques reviewed in Chapter 8 such
as search engine marketing, affiliate marketing and online advertising.
Customer loyalty improvement– companies can increase their value to customers and so
increase loyalty by migrating existing customers online (see the mini case study on
BA later in the chapter) by adding value to existing products, services and brand by
developing their online value proposition (see Decision 4).
Customer value improvement– the value delivered by customers to the company can be
increased by increasing customer profitability by decreasing cost to serve (and so price
to customers) and at the same time increasing purchase or usage frequency and quan-
tity. These combined effects should drive up sales.2 Market development
Here online channels are used to sell into new markets, taking advantage of the low cost
of advertising internationally without the necessity for a supporting sales infrastructure
in the customer’s country. The Internet has helped low-cost airlines such as easyJet and
Ryanair to enter new markets served by their routes cost-effectively. This is a relatively
conservative use of the Internet, but is a great opportunity for SMEs to increase exports
at a low cost, though it does require overcoming the barriers to exporting.
Existing products can also be sold to new market segments or different types of cus-
tomers. This may happen simply as a by-product of having a web site. For example, RS
Components (www.rswww.com), a supplier of a range of MRO (maintenance, repair and
operations) items, found that 10% of the web-based sales were to individual consumers
rather than traditional business customers. The UK retailer Argos found the opposite was
true with 10% of web site sales being from businesses, when their traditional market was
consumer-based. EasyJet also has a section of its web site to serve business customers.
The Internet may offer further opportunities for selling to market sub-segments that
have not been previously targeted. For example, a product sold to large businesses may
also appeal to SMEs that they have previously been unable to serve because of the cost of
sales via a specialist sales force. Alternatively a product targeted at young people could
also appeal to some members of an older audience and vice versa. Many companies have
found that the audience and customers of their web site are quite different from their
traditional audience.
3 Product development
The web can be used to add value to or extend existing products for many companies.
For example, a car manufacturer can potentially provide car performance and service
information via a web site. But truly new products or services that can be delivered by
the Internet only apply for some types of products. These are typically digital media or
information products, for example, online trade magazine Construction Weeklyhas diver-
sified to a B2B portal Construction Plus (www.constructionplus.com) which has new
revenue streams. Similarly, music and book publishing companies have found new ways
to deliver products through the new development and usage model such as subscription
and pay-per-use as explained in Chapter 5 in the section on the product element of the
marketing mix. Retailers can extend their product range and provide new bundling
options online also.
STRATEGY FORMULATION