INMA_A01.QXD

It is evident that these are related to the different elements of Deise et al. (2000). He says

that online these should build on existing strengths, and can use the online facilities to

enhance the positioning as follows:

Product performance excellence. Enhance by providing online product customisation.

Price performance excellence. Use the facilities of the Internet to offer favourable pricing

to loyal customers or to reduce prices where demand is low (for example, British

Midland Airlines uses auctions to sell underused capacity on flights).

Transactional excellence. A site such as that of software and hardware e-tailer dabs.com

offers transactional excellence through combining pricing information with dynamic

availability information on products, listing number in stock, number on order and

when they are expected.

Relationship excellence– personalisation features to enable customers to review sales order

history and place repeat orders. An example is RS Components (www.rswww.com).

These positioning options have much in common with Porter’s generic competitive

strategies of cost leadership or differentiation in a broad market and a market segmenta-

tion approach focusing on a more limited target market (Porter, 1980). Porter has been

criticised since many commentators believe that to remain competitive it is necessary to

combine excellence in all of these areas. It can be suggested that the same is true for sell-

side e-commerce. These are not mutually exclusive strategic options, rather they are

prerequisites for success. Customers will be unlikely to judge on a single criterion, but on

the balance of multiple criteria. This is the view of Kim et al. (2004) who concluded that

for online businesses, ‘integrated strategies that combine elements of cost leadership and dif-

ferentiation will outperform cost leadership or differentiation strategies’. It can be seen that

Porter’s original criteria are similar to the strategic positioning options of Chaston (2000)

and Deise et al. (2000). Figure 4.16 summarises the positioning options described in this

section, showing the emphasis on the three main variables for online differentiation –

price, product and relationship-building services. The diagram can be used to show the

mix of the three elements of positionings. EasyJet has an emphasis on price perform-

ance, but with a component of product innovation. Amazon is not positioned on price

performance, but rather on relationship building and product innovation. We will see in

Chapter 5, in the section on price, that although it would be expected that pricing is a

key aspect determining online retail sales, there are other factors about a retail brand

such as familiarity, trust and service which are also important.

CHAPTER 4· INTERNET MARKETING STRATEGY

Figure 4.16Alternative positionings for online services

100%

Pricing

innovation

100%

Product

innovation

Relationship building or

service quality

innovation

100%

Dabs

Smile

Amazon

Cisco

easyJet RS Components