A widely held belief in the new economy in the past, has been that change and flexibility is
good, but these interviews suggest that it is actually those companies who have stuck to a
single business model that have been to date more successful... CEOs were not moving
far from their starting vision, but that it was in the marketing, scope and partnerships
where new economy companies had to be flexible.So with all strategy options, managers should also consider the ‘do-nothing option’.
Here, a company will not risk a new business model, but adopt a ‘wait-and-see’ or ‘fast-
follower’ approach to see how competitors perform and respond rapidly if the new
business model proves sustainable.
Finally, we can note that companies can make less radical changes to their revenue
models through the Internet which are less far-reaching, but may nevertheless be worth-
while. For example:
Transactional e-commerce sites (e.g. Tesco.com and Lastminute.com) can sell advertis-
ing space or run co-branded promotions on site or through their e-mail newsletters or
lists to sell access to their audience to third parties.
Retailers or media owners can sell-on white-labelled services through their online
presence such as ISP, e-mail services or photo-sharing services.
Companies can gain commission through selling products which are complementary
(but not competitive to their own). For example, a publisher can sell its books
through an affiliate arrangement through an e-retailer.Decision 3: Target marketing strategy
Deciding on which markets to target is a key strategic consideration for Internet market-
ing strategy in the same way it is key to marketing strategy. Target marketing strategy
involves the four stages shown in Figure 4.12, but the most important decisions are:
Segmentation/targeting strategy– a company’s online customers have different demo-
graphic characteristics, needs and behaviours from its offline customers. It follows
that different approaches to segmentation may be required and specific segments may
need to be selectively targeted.
Positioning/differentiation strategy– competitors’ product and service offerings will
often differ in the online environment. Developing an appropriate online value
proposition as described below is an important aspect of this strategy.In an Internet context, organisations need to target those customer groupings with
the highest propensity to access, choose and buy online.
The first stage in Figure 4.12 is segmentation. Segmentation involves understanding
the groupings of customers in the target market in order to understand their needs and
potential as a revenue source so as to develop a strategy to satisfy these segments while
maximising revenue. Dibb et al. (2001) say that:
Market segmentation is the key of robust marketing strategy development... it involves
more than simply grouping customers into segments... identifying segments, targeting,
positioning and developing a differential advantage over rivals is the foundation of market-
ing strategy.In an Internet marketing planning context, market segments will be analysed to assess:
1 their current market size or value, future projections of size and the organisation’s
current and future market share within the segment;
2 competitor market shares within segment;CHAPTER 4· INTERNET MARKETING STRATEGY
Target marketing
strategy
Evaluation and
selection of appropriate
segments and the
development of
appropriate offers.
Segmentation
Identification of
different groups within
a target market in
order to develop
different offerings for
each group.